India should develop regional network of vital ports to reap benefits of coastline opportunities for trade growth : S&P

Noting enhanced competition, the global agency stated that India should look beyond domestic ports and develop a regional network of strategically vital ports.  According to the official data, India has a coastline of 7,517 kilometres and India’s strategic position in the Indian Ocean region plays a crucial role in shaping global maritime trade routes.

On the other hand, India’s trade is overwhelmingly seaborne, similar to mainland China, South Korea and Vietnam, which also conduct nearly 90 per cent of their trade via sea, as noted by S&P Global Market Intelligence’s Global Trade Analytics Suite.

S&P also asserted that India must implement appropriate trade, investment, and geopolitical policies in order to fully benefit from its extensive coastline.

The global agency stated, “More than 90% of India’s import trade is seaborne; a litmus test will be how it prepares its ports for increasing exports and managing substantial bulk commodity imports.” It further adds that opportunities for India are growing with a new focus on its coastline and the Indian Ocean region, beyond its immediate borders.

Indian efforts in this expanded area include regular Navy visits to ports in Djibouti and Singapore, developing maritime trade routes with Sri Lanka and Oman, and upgrading trade agreements with the United Arab Emirates and Bangladesh.

S&P in its analysis noted that the evolving dynamics in public and private sector port development are benefiting India’s maritime ambition.

“The Ministry of Ports, Shipping and Waterways’ Maritime India Vision 2030, released in 2021, is emblematic of the complexity of managing the improvement of 12 government-run and more than 200 privately run ports across India’s vast coastline,” it added.

“A litmus test will be how India prepares ports for increasing exports and to manage substantial bulk commodity imports. India’s bulk commodity imports are primarily energy imports in crude oil, liquefied natural gas (LNG), liquefied petroleum gas (LPG) and coal; metallurgical coal for steel making; and agriculture-sector imports such as fertilisers. The demand for these in India is expected to remain strong beyond 2030, backed by economic growth prospects,” the global rating agency added.

India has sufficient container capacity for the near term about 33 million twenty-foot equivalent units (TEUs) compared with 22 million TEUs handled nationwide annually.

In addition, the USD 10 billion greenfield port at Vadhavan, near Mumbai, and a USD 600 million investment in a new container terminal at Tuna-Tekra, near Kandla in Gujarat, are expected to add another 2 million TEUs of annual capacity.